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Notes to the Financial Statements
 
  23. Cash Generated from Operations
   Reconciliation of profit before tax to cash generated from operations:
   
 
Group Company  
  ---------------- ---------------- ---------------- ----------------  
    1999 1998 1999 1998
    Rs.million Rs.million Rs.million Rs.million  
  ---------------- ---------------- ---------------- ----------------  
  Profit before tax
2,325
3,461
2,325
3,482
 
Adjustments for:
 
  Depreciation (note 2)
5,003
4,795
5,001
4,793
 
  Amortisation of deferred costs
40
5
40
5
 
  Net foreign exchange gains from operations
(100)
(503)
(100)
(503)
 
  (Profit)/loss on sale of property, plant & equipment
(380)
7
(380)
7
 
  Interest expense and related charges
3,273
1,894
3,273
1,894
 
  Interest income
(103)
(90)
(103)
(90)
 
  Net connection charges (note 16)
1,182
1,454
1,182
1,454
 
  Share of result before tax of associates (note 9)
(27)
(3)
-
-
 
  Changes in working capital
 
  - trade and other receivables
15
(1,033)
15
(1,033)
 
 
- inventories
(231)
(671)
(231)
(671)
 
 
- payables
(488)
1,029
(487)
1,027
 
 
- provisions
47
(317)
47
(317)
 
 
- retirement benefits
33
130
33
130
 
 
---------------- ---------------- ---------------- ----------------  
 
Cash generated from operations
10,589
10,158
10,615
10,178
 
 
---------------- ---------------- ---------------- ----------------  
 
24. Capital Commitments
 
 
 
 
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statementsamounts to Rs.24,317 million.
 
 
25. Contingencies
 
 
 
 

Contingencies relating to income and other taxes are disclosed in note 15. Further, there is uncertainty as to whether a tax liability would arise on the balancing charge on some of the assets transferred from SLT to SLTL. The uncertainty arises because of a lacuna in Section 3(2) (f) of the Conversion of Public Corporations or Government Owned Business Undertakings into Public Companies Act, No. 23 of 1987 which was intended to exempt from tax any balancing charge arising from the transfer of fixed assets which have a zero tax written down value. The law as it currently stands does not extend the exemption to profit on asset transfers where the capital allowance claimed is less than the cost of acquisition.

The Company has made an appeal against the determination made by the Telecommunication Regulatory Commission of Sri Lanka to revise rates charged by the Company on interconnection services provided to wireless operators. The balance outstanding from these operations as at 31 December 1999 is Rs. 357 million. However, should this appeal fail, the amount of Rs. 63 million is doubtful of recovery.

The Company has instituted action against three parities regarding the provision of international telephone services outside the “International Gateway” operated by the Company. Two of those .parties have filed action against SLTL claiming redress in a sum amounting to Rs. 587 million on account of loss of profit resulting from a stay order secured by SLTL.

The potential loss, if any, on other pending litigation is estimated at Rs. 6 million.

There were no other contingent liabilities of a material amount.

 
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